Several waves of fixed-rate deals are coming to an end in the near future. The first of these should appear as soon as December, with the market set to experience a spike in residential maturities, but next year will also see further waves of remortgaging activity, including in the buy-to-let market.

It was five years ago that then chancellor George Osborne announced the additional 3 per cent stamp duty levy on second properties, prompting a wave of landlords to invest in property before the levy came into place, many of them opting for five year deals.

This fact, combined with similar waves of pending residential maturities, makes this the ideal time for brokers to be contacting their clients to help them make the decision of whether to remortgage or seek a product transfer.

Many of these borrowers will be in even more need of advice if their circumstances have changed due to Covid-19. Whether a client is a small business owner impacted by the pandemic or an employee who has been furloughed, brokers are in the best position to help these customers. Their advice in these uncertain times could help clients determine if they should opt to remortgage, product transfer or increase their borrowing, and tackle some of the myths that might be holding them back from securing a better deal.

PTs on the rise

While remortgaging activity has dipped this year, particularly where extra borrowing is required, product transfers are on the rise. PTs accounted for 77 per cent of all refinancing in Q2, up from 72 per cent in the previous quarter according to UK Finance. By comparison, remortgaging saw a 22 per cent year-on-year fall.

This is perhaps unsurprising in today’s Covid-19 world. Borrowers coming to the end of their current deal may think it is easier to just stay with their lender. PTs mean they can often carry on without fresh underwriting if they are offered a similar or better rate to their existing deal by the same lender.

In some cases, a product transfer may well be the right approach for borrowers who’ve been furloughed or who have drawn support from the government self-employed income support scheme – or if their current lender offers the best terms. One of the attractive elements of a product transfer for clients is the appearance of a straightforward switch – there’s no need for an affordability check, and neither is conveyancing required, making the whole process quicker.

But what about borrowers who want to switch or who want to borrow more, whether by remortgaging or through a further advance? As we explained in our Guide to Customer Retention, building long-term relationships with clients is vital to helping brokers futureproof their businesses.

It remains just as critical for intermediaries to plan to make sure they are engaging with their back books and continuing to support clients for whom a remortgage is the best option.

Market misperceptions

Intermediaries may need to undertake some myth-busting. For instance, borrowers who have taken advantage of a payment holiday due to coronavirus might feel as though they will be locked out of the remortgage market, and so default to a product transfer instead.

Advisers have a role here in ensuring that customers are made aware of the full range of options available and tackling the misperception that a payment holiday during the Covid-19 crisis will affect their chances of remortgaging.

Service levels shouldn’t be a factor in finding the right deal for the customer, either. While it’s true that Covid-19 has had an impact on processing times, this shouldn’t deter brokers and consumers from pressing ahead with remortgaging. It’s certainly still possible to get a quick decision for clients.

At Coventry for intermediaries, our message to brokers is that we are in a good place with consistent service levels. Through October, we were turning applications around with the average time from application to offer at 16 working days, processing documents in a matter of days. We also recently launched a new range of product transfer and remortgage options to help offer more choice in the refinance market.

Next year holds significant opportunities for advisers to put their focus back on the refinance market, with thousands of fixed-rate mortgages reaching maturity.

But while purchase activity continues to keep advisers and lenders busy during this ‘hot’ period for the market, it remains important for advisers to start planning and speaking with their customers about their refinance options in 2021.

Coventry for Intermediaries head of intermediary relationships Jonathan Stinton